Enterprise Applications and Business Process Integration Chapter 10 Enterprise Applications and Business Process Integration

Objectives How do enterprise systems provide value for businesses? How does enterprise software work? How do supply chain management systems provide value for businesses? What does supply chain management software do?

Objectives How do customer relationship management systems provide value for businesses? What does customer relationship management software do? How can enterprise applications be used in platforms for new cross-functional services? What are the challenges of implementing and using the various enterprise applications?

Management Challenges Thinking beyond the walls of corporation Obtaining value from enterprise applications

How Enterprise Systems Work Enterprise Software: Set of integrated software modules for finance and accounting, human resources, manufacturing and production, and sales and marketing that allows data to be used by multiple functions and business processes

Enterprise system architecture Enterprise Systems Enterprise system architecture Figure 10-1

Process map for procuring new equipment Enterprise Systems Process map for procuring new equipment Figure 10-2

How Enterprise Systems Work Best Practices: The most successful solutions or problem-solving methods for consistently and effectively achieving a business objective

Benefits and Challenges of Enterprise Systems Benefits of Enterprise Systems Firm Structure and Organization: One Organization Management: Firmwide Knowledge-Based Management Processes

Benefits and Challenges of Enterprise Systems Benefits of Enterprise Systems Technology: Unified Platform Business: More Efficient Operations and Customer-Driven Business Processes

Benefits and Challenges of Enterprise Systems Enterprise System Challenges Daunting Implementation High Up-Front Costs and Future Benefits Inflexibility Realizing Strategic Value

Supply Chain Management Systems Supply Chain Processes Plan: Balances aggregate demand and supply to develop a course of action Source: Processes that procure goods and services needed to create a specific product or service Make: Processes that transform a product into a finished state to meet planned or actual demand

Supply Chain Management Systems Supply Chain Processes Deliver: Processes that provide finished goods and services to meet actual or planned demand Return: Processes associated with returning products or receiving returned products

Supply Chain Management Systems Key supply chain management processes Figure 10-3

Supply Chain Management Systems Supply Chain Processes Logistics: Planning and control of all factors that will have an impact on transporting a product or service

Supply Chain Management Systems Information and Supply Chain Management Just-in-Time: Scheduling system for minimizing inventory by having components arrive exactly at the time they are needed and finished goods shipped as soon as they leave the assembly line Bullwhip Effect: Distortion of information about demand for a product as it passes from one entity to the next across the supply chain

Supply Chain Management Systems The bullwhip effect Figure 10-4

Supply Chain Management Systems Supply Chain Management Applications Supply Chain Planning Systems: Enable a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans Demand Planning: Determining how much product a business needs to make to satisfy all its customers’ demands

Supply Chain Management Systems Supply Chain Management Applications Supply Chain Execution Systems: Manage the flow of products through distribution centers to ensure that they are delivered to the right locations in the most efficient manner

Supply Chain Management Systems Supply Chain Management Applications Supply Chain Strategy Functional Products: Typical offerings that have predictable demand, high lifecycles, and often low profit margins Innovative Products: Products with more unpredictable demand and short product lifecycles, but higher profit margins

Supply Chain Management Systems Supply Chain Management Applications Supply Chain Performance Measurement Metric: Standard measurement of performance

Supply Chain Management Systems Supply Chain Management Applications Supply Chain Management and the Internet Intranet: Improve coordination among internal supply chain processes Extranet: Coordinates supply chain processes shared with an organization’s business partners

Supply Chain Management Systems Intranets and extranets for supply chain management Figure 10-5

Supply Chain Management Systems Window on Organizations Collaborative Logistics Pays Off for Land O’Lakes What are the advantages and drawbacks of collaborative logistics? How do firms obtain value from using load-sharing systems? Why is Web technology so helpful?

Supply Chain Management Systems Supply Chain Management Applications Global Supply Chain Issues Typically span greater geographic distances and time differences than domestic supply chains Strategy may need to reflect foreign government regulations and cultural differences

Supply Chain Management Systems Supply Chain Management Applications Demand-Driven Supply Chains: From Push to Pull Manufacturing and Efficient Customer Response Push-Based Model: Supply chain driven by production master schedules based on forecasts of demand, and products are “pushed” to customers Pull-Based Model: Supply chain driven by actual customer orders so that members only produce what is ordered

Supply Chain Management Systems Push versus pull-based supply chain models Figure 10-6

Supply Chain Management Systems Benefits and Challenges of Supply Chain Management Systems Supply Chain Management Benefits Improved customer service and responsiveness Cost reduction Cash utilization

Supply Chain Management Systems Benefits and Challenges of Supply Chain Management Systems Supply Chain Management Challenges If the software is implemented atop flawed processes, it can actually make matters worse Businesses must identify exactly how processes must change to take advantage of the software

Supply Chain Management Systems The future Internet-driven supply chain Figure 10-7

Customer Relationship Management Systems Customer Relationship Management and Partner Relationship Management Customer Relationship Management (CRM): Helps firms maximize the benefits of their customer assets Partner Relationship Management (PRM): Automation of the firm’s relationships with its selling partners using customer data and analytical tools

Customer Relationship Management Systems Customer Relationship Management Applications Touch Point: Method of firm interaction with a customer, such as telephone, e-mail, customer service desk, conventional mail, or point-of purchase

Customer Relationship Management Systems Customer Relationship Management Applications Customer Data May Come From: Responses to direct mail campaigns Web site interactions Bricks-and-mortar stores or branches Call centers Sales force staff

Customer Relationship Management Systems Customer Relationship Management Applications Customer Data May Come From: Advertising and marketing activities Sales and purchase data Account data Service and support records Legacy data

Customer Relationship Management Systems Customer Relationship Management Applications Customer Data May Be Acquired From External Sources Customer lists from direct marketing campaigns Demographic data Psychographic data

Customer Relationship Management Systems Customer Relationship Management Applications Customer Relationship Management (CRM) Application Software Packages contain modules for partner relationship management (PRM) and employee relationship management (ERM)

Customer Relationship Management Systems Customer Relationship Management Applications Cross-Selling: Marketing complimentary products to customers Up-Selling: Marketing higher-value products or services to new or existing customers Bundling: Cross-selling in which a combination of products is sold as a bundle at a lower price

Customer Relationship Management Systems CRM software capabilities Figure 10-8

Customer Relationship Management Systems Operational and Analytical CRM Churn Rate: Measurement of number of customers who stop using or purchasing products or services from a company Operational CRM: Customer-facing applications, such as sales force automation, call center and customer service support, and marketing automation

Customer Relationship Management Systems Operational and Analytical CRM Analytical CRM: Application dealing with the analysis of customer data to provide information for improving business performance

Customer Relationship Management Systems Customer loyalty management process map Figure 10-9

Customer Relationship Management Systems Operational and Analytical CRM Market Segmentation: Dividing a heterogeneous market into smaller, more homogeneous subgroups where marketing efforts can be more specifically targeted and effective

Customer Relationship Management Systems Analytical CRM data warehouse Figure 10-10

Customer Relationship Management Systems Operational and Analytical CRM Firms could analyze customer data to focus on: Profitability levels Numbers, types, or usage of multiple products Product pricing Total revenue anticipated Likelihood of acquiring a new product

Customer Relationship Management Systems Benefits and Challenges of Customer Relationship Management Systems Benefits of Customer Relationship Management Systems Increased customer satisfaction Reduced marketing costs and more effective marketing Lower costs for customer acquisition and retention

Customer Relationship Management Systems Benefits and Challenges of Customer Relationship Management Systems Customer Relationship Management Systems Challenges Costs run higher for organizations with global operations Failure rate for CRM systems can run as high as 55% to 75% because of cost overruns, integration challenges, and poor user acceptance of the new system

Customer Relationship Management Systems Benefits and Challenges of Customer Relationship Management Systems Metrics for Customer Relationship Management Cost per lead Cost per sale Number of repeat customers Reduction of churn

Customer Relationship Management Systems Benefits and Challenges of Customer Relationship Management Systems Metrics for Customer Relationship Management Customer satisfaction Number or percentage of problems/complaints Lead generation rate Lead conversion rate Sales closing rate

Customer Relationship Management Systems Benefits and Challenges of Customer Relationship Management Systems Customer Lifetime Value (CLTV): Difference between revenues produced by a specific customer and the expenses for acquiring and servicing that customer minus the cost of promotional marketing over the lifetime of the customer relationship expressed in today’s dollars

Customer Relationship Management Systems Window on Management Canadian Firms Show How to Succeed with Customer Relationship Management What management and organizational factors explain these companies’ success with customer relationship management? Why is it that all companies cannot duplicate their success?

Enterprise Integration Trends Extending Enterprise Software Major software vendors have developed Web-enabled software for: Customer relationship management Supply chain management Decision support Enterprise portals

Enterprise Integration Trends Service Platforms and Business Process Management Service Platform: Integration of multiple applications from multiple business functions, units, or partners to deliver a seamless experience for the customer, employee, manager, or business partner

Enterprise Integration Trends Service Platforms and Business Process Management Business Process Management: Methodology for revising the organization’s business processes to use business processes as fundamental building blocks of corporate information systems

Enterprise Integration Trends Enterprise Portals Enterprise Portal: Web interface providing a single entry point for accessing organizational information and services

Enterprise Integration Trends Order-to-cash service Figure 10-11

Enterprise Integration: The Pepsi Challenge Chapter 10 Case Study Enterprise Integration: The Pepsi Challenge Analyze PepsiCo using the value chain and competitive forces models. How did the company respond to its competitive environment? Were the “power of one” principle and preselling good ideas for PepsiCo? Why or why not?

Enterprise Integration: The Pepsi Challenge Chapter 10 Case Study Enterprise Integration: The Pepsi Challenge What were the challenges the company faced in installing enterprise systems? Was PepsiCo successful in implementing these, and why? Describe PepsiCo’s attempt to change its delivery systems. What problems did it encounter? Do they relate to its challenges in attempting to install enterprise systems? Do you think it will be successful? Explain your answer.